The body that represents Britain's universities has withdrawn guidance on the gender segregation of audiences in lectures and debates after an intervention from David Cameron.

Universities UK (UUK) said on Fridaythat the controversial policy which allowed the voluntary separation of men and women at events such as lectures on Islam by visiting speakers was being dropped pending a review.

The body had sought guidance from the Equality and Human Rights Commission (EHRC), which said that, while the law allows segregation by gender in premises being used for religious purposes, it was not permissible in an academic meeting or in a lecture open to the public.

The announcements from UUK and the EHRC followed severe criticisms from the prime minister's spokesman on Friday morning, who had said UUK should urgently review the guidance.

The U-turn is an embarrassment for UUK, which has attempted to fight off criticisms over the policy for several days. The body had insisted that it had sought legal advice from a senior QC, who said that gender segregation should be allowed if requested by the lecturer and students.

But yesterday, Nicola Dandridge, chief executive of UUK, said it had withdrawn a case study which had been used to justify the policy. "Universities UK agrees entirely with the prime minister that universities should not enforce gender segregation on audiences at the request of guest speakers. However, where the gender segregation is voluntary, the law is unclear. We are working with our lawyers and the EHRC to clarify the position.

"Meanwhile the case study which triggered this debate has been withdrawn pending this review."

UUK's guidance set out hypothetical case studies based on situations that arise on campuses, including where a speaker from an ultra-orthodox religious group requests that an audience be segregated by gender. It set out the legal framework which universities should bear in mind when deciding what action to take.

The report stated that university officials must consider both freedom of speech obligations and discrimination and equality laws, and it concluded that institutions ought not to enforce segregation, but if participants were happy to sit in separate groups, that should be permitted as long as no disadvantage was caused.

UUK issued the guidance following a series of Islamic events at campuses at which male and female students had been separated.

The body had sought an opinion from the senior barrister Fenella Morris QC, which concluded that the advice was "an appropriate foundation for lawful decision-making by universities". But the guidance prompted widespread criticism and protests from students.

On Thursday, Downing Street had declined to comment on the row. But after an intervention by Michael Gove in an interview with the Daily Mail, the prime minister's spokesman launched into an unusually strong attack on UUK's policy.

"There is an issue around speakers who are invited into universities," it said. "He doesn't think that guest speakers should be able to address segregated audiences and he thinks that Universities UK should urgently review its guidance.

"There is an important issue around principle and possible risks around discrimination. I think [Cameron] feels very strongly about this."

The spokesman made it clear that the PM wanted a ban on gender-segregated audiences on campus even where men and women voluntarily separated themselves. He also stressed that those views did not extend to places of worship such as mosques, synagogues or gurdwaras.

Business Secretary Vince Cable, whose department has responsibility for universities, was writing to UUK calling for the guidance to be amended to clarify the distinction between private worship and areas of public learning.

He said: "I am clear that forced segregation of any kind, including gender segregation, is never acceptable on campuses.

"But how the law applies where segregation is voluntary is unclear. That is why I am writing to Universities UK asking them to clarify that distinction between private worship on the one hand and public areas of learning on the other, and to amend their guidance accordingly.

"Many universities already have very strong equalities policies that do not allow segregated events on their campuses. We have also seen several recent events cancelled by universities because the event organisers insisted on segregation.

"But this needs further clarification to ensure our universities are never places where discrimination of any kind is tolerated."

On Thursday, UUK, which represents more than 130 institutions, said it was seeking a definitive legal view on the issue from the EHRC after its London HQ was targeted by student protesters.

UUK's controversial advice took the example of an ultra-orthodox religious group invited to speak as part of a wider series of talks on faith, where the speaker requested the audience be segregated. The guidance said that if, for example, women and men were seated separately side by side rather than men at the front and women at the back, there would not necessarily be any gender inequality, and voluntary segregation could be permitted.

EHRC chief executive Mark Hammond said it was not permissible under the law for universities to segregate by gender in academic meetings.

"Universities can provide facilities for religious meetings and associations based on faith, as in the rest of society. Equality law permits gender segregation in premises that are permanently or temporarily being used for the purposes of an organised religion where its doctrines require it.

"However, in an academic meeting or in a lecture open to the public it is not, in the commission's view, permissible to segregate by gender," he said.

However, Tahir Nasser, chairman of the Ahmadiyya Muslim Students' Association UK, which regularly organises lectures on Islam on university campuses, said the prime minister's views did not take into consideration the sensitivities of other communities.

"I completely disagree with the forced segregation of students at universities. This is really a non-issue as Muslim women and men who feel more comfortable sitting next to people of the same gender are already able to do so. Their personal preference should not be imposed upon others who have a different preference," he said.

"However, at the same time, those wishing to freely sit separately should be able to do so and their rights respected just as those of others are."